Tenders of LEPL Batumi Boulevard raise questions - საერთაშორისო გამჭვირვალობა - საქართველო

Tenders of LEPL Batumi Boulevard raise questions

28 March, 2016


Active discussions have been surrounding Batumi Boulevard in the past several months. Transparency International Georgia, along with observing and studying the ongoing processes, has looked into the public procurement recently carried out by Legal Entity of Public Law (LEPL) Batumi Boulevard.

In 2016, the budget of LEPL Batumi Boulevard increased, amounting to an unprecedented, compared to previous years, GEL 11m. It is planned to spend some GEL 8.5m out of these GEL 11m on the rehabilitation of Batumi Boulevard.

Transparency International Georgia, as a result of analyzing procurement, carried out in 2015-2016 and the process in general, has established that:

  • The rehabilitation works planned and carried out on the Boulevard often contradict the actions allowed on cultural heritage sites;
  • The commission established with the aim of planning and elaborating the Batumi Boulevard concept has been mainly staffed with public officials; independent experts have not been involved in its work;
  • There is a valid suspicion that preliminary negotiations were held between LEPL Batumi Boulevard and Hotel and Spa Resort Oasis on the elaboration of the Boulevard concept;
  • The changes made in the project might become the reason for misuse of budget funds;
  • To obtain the permission to implement the works, LEPL Batumi Boulevard submitted different projects to Batumi City Hall and to the Cultural Heritage Agency, which means that some of the works on Batumi Boulevard were carried out without the permission of its owner (the Batumi Municipality) – in contradiction to the requirements of the law.

Boulevard concept and contract awarded to Hotel Oasis, LLC

Since 1987, Batumi Boulevard has been a national monument of garden and park design of Georgia and also a recreational zone. To this day, there is no document (conservation plan) which would provide guidelines for intervening with the site and a list of allowed interventions. Because such a document does not exist, many buildings with the design inconsistent with the cultural heritage site have been erected along the Boulevard.

On 6 June 2015, on LEPL Batumi Boulevard Director Giorgi Zirakishvili’s order, a united commission on the elaboration and planning of the Boulevard development concept was established. This commission was to determine the technical assignment for the concept of the future development of the Boulevard (the Law on Cultural Heritage envisages only the preparation of the conservation plan, not the creation of a concept for new development).

The commission, which was tasked with determining the technical assignment, was staffed with public officials: independent experts, landscape architects, dendrologists and culturologists were practically excluded from the work of the commission. The process unfolded without the involvement of civic organizations and interested citizens, in violation of the principles of transparency and accountability. According to the technical assignment, a company that would win the tender was to prepare a topographic map as well as a concept of the Boulevard development. After implementing the technical assignment, on 1 October 2015, Giorgi Zirakishvili, who was the director of Batumi Boulevard at the time, sent an official letter to Davit Baladze, minister of finance and economy of the Autonomous Republic of Ajara, and informed him about the plan to make a public procurement worth GEL 240,000 for the elaboration and planning of the Boulevard development concept.

According to the Decree 189 of the Government of the Autonomous Republic of Ajara, the Administration of the Batumi Boulevard received the permission to make a simplified public procurement. It is the opinion of Transparency International Georgia that, in this case, it would have been more preferable to announce a tender allowing foreign companies to participate as well, since the number of companies which have the experience of preparing concepts (conservation plans) for garden and park monument sites is limited in the Georgian market.

After the Ajara Government issued its consent, LEPL Batumi Boulevard three companies to submit their bids: Arkmaster, LLC asked for the total of GEL 305,000 for preparing a topographic map and a concept of the Boulevard, Evro Bild, LLC – GEL 300,000. Hotel Spa Resort Oasis, LLC asked for the exact amount of GEL 240,000 which the Boulevard Administration indicated in its letter to the finance minister. As a result, the Boulevard Administration awarded the service contract to Hotel Spa Resort Oasis, LLC (this could become a basis for suspicion that Hotel Oasis and the Boulevard Administration held consultations before signing the contract).

On 16 December 2015, in Radisson Hotel, Hotel Spa Resort Oasis presented the draft concept of the Boulevard which aroused protest in part of the public: according to the presented draft, the Boulevard planning was to be changed, the third alley was to be removed and replaced entirely by cafes and restaurants. According to the technical assignment and the presented draft, the Law of Georgia on Cultural Heritage was going to be violated.

Transparency International Georgia believes that the proposed works are not the actions allowed with regard to a cultural heritage site: the aim of the concept is the “renovation of the spatial and dimensional design” whereas, according to the Law of Georgia on Cultural Heritage, intervention with a monument is allowed if its authenticity is retained.

Albereta, LLC (Austria) owns 91 percent of shares of Dreamland Oasis, LLC (which incorporated Hotel Spa Resort Oasis on 24 December 2015); MP Goderdzi Bukia’s daughter, Natia Bukia, owns 8.3 percent of its shares. According to the Public Registry, Natia Bukia is also a manager of 25 percent of the company shares.

Hotel Spa Resort Oasis, LLC is among the companies who, by the government’s decision, were exempted from paying several million lari to the budget. On 30 July 2015, based on the Georgian Government’s decree, Hotel Spa Resort Oasis, “with the aim of supporting its operation”, was exempted from paying a penalty that was imposed or was to be imposed (the penalty at the time amounted to approximately USD 2.4m): on 25 August 2008, Hotel Oasis bought a territory of 42,000 sq. m in the settlement of Chakvi for GEL 2,270,000 through an auction; the company was to invest GEL 7m.

Contract with Limtom, LLC

LEPL Batumi Boulevard on 21 September 2015 announced an electronic tender (SPA150025587) for the procurement of the works of rehabilitation of the sewage system on the territory of Old Boulevard, dismantling and removal of asphalt cover, damaged tiles, the breccia cover and old curbs from the University Square rise to the Tkupebi Café and Bar, outfitting and connecting natural rainwater drainage wells (transfer to pumping to the beach), decorative concrete tiles and curbs.

On 26 November 2015, a public procurement contract was awarded to the Russian company that won the tender – Limtom. The contract value amounted to GEL 1,253,159.55. The works were to be completed within 105 (one hundred and five) calendar days from signing the contract – on 10 March 2016.

According to the project cost estimate documents in this contract, two out of three alleys of Batumi’s Old Boulevard were to be covered in 6-cm-thick, diamond-shaped concrete tiles – the total area of 10,971 sq. m, while the third alley was to be covered in grass on the area of 3,879 sq. m. After public protest was voiced, the decision concerning the third alley was changed and, as a result, in order to amend the standing contract to pave the third alley with concrete tiles, a new project had to be prepared – the procurement of these works increased the costs for the Boulevard Administration by approximately GEL 300,000.

In addition, the Boulevard Administration presented different projects to Batumi City Hall and Ajara’s Cultural Heritage Agency. The Batumi mayor signed a document according to which the company was to replace the old tiles with the new concrete ones in all three alleys, while the project submitted to the Cultural Heritage Agency envisaged paving two alleys with decorative concrete tiles and replacing the curbs. It is noteworthy that the Cultural Heritage Agency never found an error in the documents submitted by LEPL Batumi Boulevard. No relevant agencies took interested in this occurrence either.

Contract with Imereti, LLC

On 18 January 2016, LEPL Batumi Boulevard identified the company that won the public procurement tender – Imereti-98, awarding it a service contract worth GEL 305,201.50. The subject of the contract is the dismantling of the damaged mosaic on Batumi Boulevard along Ninoshvili Street, replacing it with decorative tiles and fitting the area with curbs.

We call on LEPL Batumi Boulevard to refrain from using a direct purchase procedure to procure services from companies when spending the resources envisaged by the 2016 budget and to make every effort to ensure the transparency of the process when creating a specific environment.

Transparency International Georgia calls on the State Audit Office to look into the alleged irregularities uncovered by the organization in the sphere of procurement in 2015-2016 and inform the public about its corresponding conclusions.

Author: „საერთაშორისო გამჭვირვალობა – საქართველო“